Short-term factors affect Q4 performance, and the company's fundamentals are good and do not change the medium-and long-term trend.
On January 15, the company issued an annual performance forecast for 2019, benefiting from the rapid growth of 5G mobile communication equipment products and the company's expansion into overseas markets, the 19-year net profit is expected to be 9000-114 million yuan, an increase of 85.15% 134.53% over the same period last year. The company's fourth-quarter results are lower than expected, which we believe is mainly affected by short-term factors and Bofatt's excess performance awards are concentrated in the fourth quarter. We believe that the fundamentals of the company are good. With the volume of 5G construction and the acquisition of operators, it is expected to broaden business revenue channels with new customers and new products, and continue to maintain rapid growth in the medium and long term. We expect the company's EPS to be 0.65 EPS 1.51 shock 1.92 yuan respectively in 2019-2021, maintaining a "buy" rating.
Q4 performance decline due to short-term factors and performance excess reward
After deducting the excess performance reward of 19.53 million yuan, the net profit of the company's Q4 is 1134-35.34 million yuan, down 6.4-70% from the previous month. We believe that the revenue of 5G products in a single quarter may decline due to the impact of 5G co-construction and sharing technology solution, and there is no problem with the company's products. Product demand is expected to recover after the technology solution is mature. According to the amount of performance reward provision, we estimate that Bofart's 19-year net profit is about 102 million yuan, an increase of 89% compared with the performance commitment of 54 million yuan, indicating the company's strong profitability.
5G RF products have been supplied to Ericsson, ceramic dielectric filter waiting for release
We are optimistic about the future growth of the company: 1) with the deep coverage of 4G networks and the acceleration of 5G base station construction by domestic and overseas operators, the market demand for mobile communication products is strong. It is expected to promote a substantial increase in revenue; 2) Vertical layout new products: through the acquisition of Jetband electronic vertical layout ceramic dielectric filter technology, the company has entered the customer sample test stage, waiting for customer demand. 3) horizontally expand new customers: the company, originally one of the main suppliers of antenna RF products of ZTE Corporation and Japan Electric, has successfully entered the Ericsson supplier system and is expected to open up the incremental market space.
5G Commercial promotes the substantial growth of the Market scale of Antenna Radio end
The overall improvement of bandwidth, delay, synchronization and other performance in the 5G era has greatly promoted the upgrading of antenna radio-frequency technology. As a whole, large-scale array antennas and antennas actively drive the overall wireless radio-frequency side value has greatly increased. According to estimates, we expect the space in the macro base station antenna market to reach 67.2-7.56 billion yuan per year during the peak construction period (2020-2022), an increase of 32% and 48% compared with the 4G construction period. For the corresponding filter market, the market space for macro base station filters is expected to reach about RMB 51.6-5.94 billion per year during the peak construction period (2020-2022), an increase of 91% / 120% compared with the 4G construction period.
5G antenna RF upstart, maintaining a "buy" rating
According to the forecast of performance forecast and excess performance incentive provision (19.53 million yuan), we adjust the 19-21 income forecast and 19-year expense forecast, and we expect the company's net return profit in 2019-2021 to be 1.10 pound 255x323 million (the previous value is 264x324 million), the corresponding EPS is 0.651.51 pound 1.92 yuan, and the corresponding PE is 6016620x. The average PE of comparable companies in the same industry in 2020 is 36x. We believe that we can give the company a valuation level of PE 30-35x in 2020, corresponding to the target price of 45.3-52.9 yuan, and maintain the "buy" rating.
Risk tips: 5G development is lower than expected; horizontal expansion customers are not as expected; self-developed ceramic dielectric filter scheme is not as expected.